Real Talk on Real Estate: The Impact of On-Site Visits for Passive Investors

Tim Lyons  00:03
Welcome to another episode of the Passive Income Brothers Podcast. My name is Tim Lyons, and today I’m joined by an absolute Rockstar, my brother Greg. How are you doing today, buddy?

Greg Lyons  00:38
Tim, I am so happy to be back behind the microphone. Again. It’s been a while since we recorded. So happy to be here. And I think we have a pretty cool topic today for our passive investors, especially.

Tim Lyons  01:10
Yeah, so Greg and I had an opportunity to go on a little bit of a field trip together, which was awesome to spend a few days together down in Dallas. And we wanted to bring you guys some information about the power of being on-site somewhere. Being together, being with your team, building out a team. And as a limited partner or a passive investor. A lot of the reasons we get into this game, Greg, is that we don’t have the time, we don’t know, we don’t have the know-how, we don’t have the team built out. And that’s where working with a company like ours can maybe benefit some folks. But the power is really in building all that out so that you can live the life that you want to live on your terms while your team is basically taking care of the rest. So Greg and I had an opportunity to be on-site in the Dallas-Fort Worth area for about four days this past week. That’s why we’re coming to you on Friday instead of Wednesday. And we had a great time doing a lot of stuff. And we’re going to be able to tell you some more about that in the next episode. But for this episode, Greg, let’s concentrate on what we were able to do over the two-day period, where we rented a car and took a field trip.

Greg Lyons  02:22
First of all, your credit card skills were right on point; the old hybrid Toyota Highlander was comfy, and it may get us around town. But Dallas is a place where we have six properties and six multifamily properties. And there was a lot of power in just being able to pull up to the property, check it out, and see what was going on. You can only see so much from an investment deck. It was from a webinar, but when you get on-site, it was very powerful for us. And we’ll just kind of walk you through why, but a great visit to the Dallas MSA.

Tim Lyons  03:04
So, Greg, as a New Yorker, where I always like to joke around that everybody is guilty till proven innocent in my world. And I’m still working on that still coming along. Being a limited partner can be hard, right? It can be really hard to wire that money, it can be really hard to pull the trigger, and it can be really hard to be stuck in analysis paralysis. Should I invest in this fun? Should I invest in that deal? Should I maybe just stay in cash? Should I just go back to my financial advisor? Shouldn’t all these things go through our minds, right? Because we’re human. And this is the human condition, right? There’s uncertainty. And we’re all searching for a little bit more certainty. And I can tell you with conviction that my being a part of this company, being part of a team with Greg and Paul, and being on-site was very powerful because I am a limited partner in these deals in most of these deals as well. So it’s not only my money, it’s my family’s money, it’s my kid’s college tuition, or a wedding fund, or my McKenzie, who is obsessed with horses, right, and I can see a horse in my future someday. So it’s really powerful for me to have done this field trip as an LP or a limited partner, a passive investor. So I know it’s not feasible for everybody to get on a plane or spend a few days away from life and your kids or do your job or what have you. But if you live in a certain market that you want to invest in, as a passive investor, go out and visit these properties, right? Get in the car, drive around and see what’s going on and see, see what the value add plan is in the investor summary, and then, see how it compares to what you’re actually seeing on the ground. So, Greg, so we had the opportunity to go see six properties. So what were some of the things, like what was the what was the point of actually going to the properties and when? What were some of the things we were able to accomplish?

Greg Lyons  04:58
Yeah, so Tim, I think the main takeaway from the whole thing is that Mackenzie’s horse-riding hobby is going to be quite expensive; we could do a complete podcast on that. It’s, you’re really going down the wrong path. But anyway, there’s nothing like it getting out and driving around, driving around, not just the properties, but the actual neighborhoods, and the MSA, or the city that you’re investing in, you get a feel for block by block things change, for the better for, the worse, but there’s nothing like getting in the car and driving around.

Tim Lyons  05:36
So when we pulled up some of these properties, we were eyes wide open, and it was myself and Greg, and Paul, our partner, and actually my dad, big, rich, big Rich, was on scene with us. And he is one of our investors in a lot of these properties. So Big Rich is retired. He was born the poor guy with a ton of limiting beliefs. Little by little, we’re cracking them. Greg, I think having him in the car was really powerful. So we would pull up to these properties. And we’d be checking it out because some of these properties we’ve owned, well, all of them, Greg, have been owned for less than a year. Right. So, if you are reading the mainstream media or other websites that I won’t mention here, that kind of like to put a target on real estate and commercial real estate at that. And certain sponsors they like to take down, you can get really discouraged and be like, man, what am I doing? Or should I even do that? That sounds good. That sounds crazy, but when we’re able to pull up to these properties, Greg, they’re completely painted. The fencing is all brand new, the gates work, there’s no garbage on the property, and there are new carports being installed or have been installed. , there are landscaping measures that are obvious. I mean, we’re talking flowers and planters and green grass, and everything just seems to be squared away, as it makes you. I was really, really proud not only to be an LP in some of these deals but also to be able to GP on these deals. Because I’ve never had that experience, Greg, where we drove to so many properties in one or two days, and we’re able to speak with the residents and speak with the staff on site. Hey, what are you seeing? What are you hearing? What do you like about this property? What do you like about the group that we’re working with? What are some of the things that you wish we could change, or what’s on top of your mind and it was really powerful? So especially Greg, on the first property, we went to meet that guy from New York City, I just thought it was fitting to really connect with a resident that we could talk about New York, we could talk about Texas, we can, but it was, it was awesome. So, let me throw it back to you.

Greg Lyons  07:48
With the site visits, and as you said, we’ve owned a lot of these properties for less than a year, some of which we’ve owned for less than six weeks. But, the amount of progress that the operator is making in turning these properties around. You mentioned the paint, but it’s the flowers in front of the welcome, boy, and monument sign. Yeah, the monument signs, I mean, the places just look fantastic. And more than anything, the people that were working there, not only the property managers, but the people, the facilities, people, they were buzzing around almost all of these properties, either picking stuff off or fixing stuff, they were construction crews on site because they’re renovating units, it was just a really, really powerful reminder, it almost gave like that, that pride of ownership, when you pull up to your house, and you just finished the whole complete weekend of cutting the grass, putting the mulch and doing the flowers, all that stuff, it had that same kind of pride of ownership, which was really cool. So, the cipher is this: we’re wanting to see the physical structures. But when you talk to the people, that is really important, especially the property managers. , when you talk to an operator, you talk to the CEO or the CFO. It could all be daisies and flowers and dewy meadows. But when you talk to the people actually doing the work every day, that is important, and that is powerful for us, especially the property managers.

Tim Lyons  09:14
So when we walked into these welcome centers or the clubhouse or the owners, not only were they just brand new redone, or being in the process of being done, but as soon as you walked in, the staff jumped up out of their chairs welcomed us, had no idea who we were, who were these people walking around my property, right? And they couldn’t have been nicer. They had no idea who we were, and they wanted to know and introduce ourselves and introduce themselves to us. And when we introduced ourselves to them, nothing changed, right? Oh, well, that’s wonderful. They were saying let me show you around right, and without skipping a beat, we were in and out of units right, classic units, renovated units, getting a property tour. Here’s this, and here’s that, and this is phase one of the building project. And here’s phase two. And this was built two years ago; I know there was history there, Greg. And what was striking to me was that most of those properties, the leasing agents, or the property managers, I should say, were there in the business, maybe not for this particular company, but they were in this market for 15 years or so. One of them had been in the market for 32 years, and she had been on site for 16 of those 32 years. So it was just really reassuring, for me, it was validating, it was validating for our thesis, for our mindset for our investments here at the Lions household. 

Greg Lyons  10:46
What also struck me about the property managers, Tam was their knowledge. They were so knowledgeable, not only about the property, but some of them were new to the properties. When you’re turning around a property, usually install your own property manager. So some of them were new to the properties, but their knowledge of the properties and their knowledge of the neighborhood, and who inhabited that neighborhood and, and where the next tenant was coming from, that was really impressive to see. So when you think about your investment in good hands, the people that we were meeting would definitely fit that bill. And then you also mentioned that resident that we spoke to, he was from New York City and relocated to Dallas and was working down there as some sort of aerospace something or other means technician, but we asked him how we improve the property, what’s going on down there, his biggest complaint was, can we make the fitness center 24 hours, and then he followed up with, and they’ve already ordered the lock or the key or the keypad to install so, when that is your biggest complaint about the place, because he also rattles off, how good the management’s been, they’re renovating units and feel really comfortable here. Those are all really, really solid things. So, the pride of ownership was outfitted there. 

Tim Lyons  11:19
Yeah, I mean, that was that was great. I mean, that was the first property I went to, and I went right over to the guy and introduced myself, and lo and behold, he’s from New York City. Right, Greg? And he said he works off hours, right? He works the overnight shift. So when he comes home, he wants to grab a workout. But the fitness center wasn’t open yet, or something like that. And yet management said no, yeah, we’ve already ordered the piece, and this is going to be installed once it comes in. And that was really awesome. I mean, that felt good, almost like that was his only complaint about the property, not the pricing, not the service or anything like that. And, like, listen, we’ve had properties, Greg, that, there have been some garbage issues, right, people have a hard time getting their garbage into the recycling bins, or into the, he trash dumpster, in the designated area, and it can become unsightly, right, and then it can attract vermin, and, Roaches and rats and whatnot. And, no matter what you do, this, this area is being videotaped, and you’re gonna have a fine or whatever it might be, it can be an issue, but when you drive to a property, and that’s not an issue, I mean, it’s a testament to the management company, it’s a testament to the quality of the people that are living there. So yeah, that was really great.

Greg Lyons  13:29
The other thing I was gonna say is, or the next point was, we went to six different properties, and they were all different. I mean, one was, gosh, what was like a Class A property was absolutely beautiful. And then there were some others and working-class neighborhoods. And people have to have food, clothing, and a place to live. Those are the things that people take care of, and to take a look at these properties, whether in a class, a neighborhood, or a working-class neighborhood, there was, it felt like there was some pride it because of the condition of these properties were really, really top notch. And when you invest in working-class housing, whether it’s in Dallas, or Michigan, or, or Phoenix, wherever it may be, there’s a certain when you’re with the right operator, there’s a certain part of your investment that goes to changing a neighborhood and giving people a safe, affordable, clean place to live. And, you create real value when you’re changing these apartment complexes that are more in the working-class neighborhoods. And that was really, really great to see, and it almost felt like your money was going towards something good because it was improving the condition of some people’s lives. 

Tim Lyons  14:49
Yeah, Greg, I want to stack on top of that we were there. I think at that first or second property, we stopped by, and the school bus must have gone out, and, I swear, like little kids, just skipping, hopping, jumping, running, screaming,  they were excited to be home from school. And that’s after we talked to the staff at the property, and it just kind of hit home, right? Like I’m really proud of being an investor, I’m proud to be a part of the cityside capital. I’m proud to be in New York City, firemen, all those things, right? But when I was on site, I was proud to be a part of that property, to be like, yes, these are people’s homes. At the end of the day, Greg said that yes, there are investments for us and for our investors. And, there’s cash flow, and there’s all these things, and we talk about on the on this on this on this podcast, but it’s, um, it’s somebody’s home, right, and they want to come home to a clean, safe, affordable place to live. And that’s going to become their home. So that was great. 

Greg Lyons  15:46
I will say that day we were at that property, and the school bus led out. It was the Dallas Chamber of Commerce that was sponsoring the day. It was 65 degrees, it was beautifully sunny, and the kids were so excited to be home. And then two days later, it was 19 degrees. But that particular day, sponsored by the Dallas Chamber of Commerce, it was unbelievable.

Tim Lyons  16:09
That’s definitely something Dad would say, by the way, anyway. , speaking of dead, we had him in the back of the car. And it was really kind of educational for him. , he’s 73 years old. He’s retired now. And, we’ve mentioned him, and a number of times, he’s never going to hear this; by the way, the poor guy can’t figure out his iPhone, and I don’t know if he knows how to turn the podcast on. But anyway, when Greg, when we used to, when each of us was ready for college, and maybe a senior year of high school, each of us from our oldest brother to you, to me, we would go with dad, and we would drive around college campuses. And that was, like, our favorite thing to do, right? We’d go to the college, we’d check into the hotel, whatever it was, and then we get in the car, and we want to go see what it was like; what’s round there? Where’s the arena? Right? Because we’re basketball, college basketball junkies in our family, where’s the football field? Let’s check out the facilities. Let’s go see where the restaurants are. And I kind of felt that a little bit with you and Dad in the car, right? It kind of felt like doing that. And I just, it was a lot of fun. 

Greg Lyons  17:14
That was, that was a lot of fun. We always have great stories on our college trips, and we have great stories coming out of this trip. Probably not for the podcast, but it was great to have Big Rich along and, more importantly, having him along because he was an investor in some of these properties. And I think that really hit home for him.

Tim Lyons  17:35
So let me just paint a picture of my dad for a little because you might have somebody in your life that is just like this, or maybe this is you, and I’m talking directly to you. Yeah, dad is 73. Yes, he’s retired, right? But he’s done all pretty well in life when he has some retirement, cash saved up, and whatever. But when it comes to investing, he was old school, right? The poor guy still ladders his CDs at the bank, like it just makes them feel good. He likes to read 10k reports and go through the company’s financials. And he has CNBC on in the background all day long, listening? And that’s just the kind of guy he is, right? And he was a commercial lender for, I don’t know, great—fifty years, maybe 45 or 50 years, in New York City. So we can. He’s kind of one-way, right? And he kind of has a very narrow scope of what he’s comfortable with. How am I doing so far? Greg painted a pretty good picture.

Greg Lyons  18:27
A narrow scope doesn’t begin to this day to describe it. But the opposite of a real estate investor didn’t really take much risk, really just kind of played it down the fairway. 

Tim Lyons  18:38
So he has a home. And then he has a rental home, right, the same kind of nearby complex, and he paid cash for his rental home. It just made him feel better, right? He didn’t want any debt, but it was always kind of an issue. He doesn’t like risk. He’s very risk-averse. And I’m open to painting a good picture here. And even though I was trying to tell him, back in, 28 918 19 Dadrates are, two and three quarters, three and a half, 3%, why don’t you put a little bit of debt on the property, then you can leverage it, but you just wouldn’t have it? And then, we started doing our thing here at the cityside capital, and he, I don’t know, Greg, maybe begrudgingly because He loves us, got involved. And, he’s got cash flow, and he’s got, he’s sad. He literally came back to New York on two or three different occasions over the last couple of years to sit with his accountant, and like, learn next to his accountant right and ask him to pepper him with questions and how this works, and I know not everybody can do that. But that’s what he did. And that was his process, right? Because this was something totally new to him. He was a Wall Street type of guy, right? He was in New York City finance. And that’s you out there. If you’ve kind of been conditioned like we all were kind of right. Get a good job. Go to college. Get a good job. Max out the four. Okay, buy the home, try to pay down as soon as you can, put money into an emergency account, and whatever you have leftover, dollar cost average into whatever stocks, bonds, S&P, whatever it might be. And, by the time you’re 65 or 70, you will have accumulated. That’s the accumulation model we’re talking about. Enough that maybe now you can feel like you can retire and start deducting from that accumulated capital. And, for us, for me, at least, Greg, that wasn’t good enough. I’m looking for passive income to be equal to or greater than my monthly expenses through cash flow, right? And when you understand that, when you have this paradigm shift, it’s kind of magical, right? Because you realize that there are so many ways to do it, right? You can do it like that. And do single-family rentals, you can do your own thing, a duplex triplex, you can do the burr method, you can live in one unit and rent out the rest, and it was so much house hacking, right. But, understanding how the cash flow plays into your everyday life can be powerful. And for him to have built out a nice little cushion now of monthly and quarterly checks from the deals that he’s in with us. He feels good about it. Right? He feels good about it. He understands the tax treatment now of that income. And then, finally, the cherry on top, Greg, was to bring him to that class a property that he was a part of. And he was like a little kid on Christmas, man, he wanted to go into the units, he wanted to walk the entire property, and he had a ton of questions for the property management company. He kept on saying no, this is great. This is great. And, maybe one day we can share the photo, but we have a photo with him standing in front of the monument sign outside the main gate, like with his biceps, flex, like, he’s so strong, and he’s so confident. But that wasn’t him. That wasn’t him just a few short years ago. So if that’s you out there, I can tell you with certainty that it took Greg and I multiple hours of education, multiple phone calls, multiple, I think I had a couple of gray hairs put directly onto my head from my dad’s questions. But what, I feel good about it, it was like, for me, it was like, seeing him happy, seeing him come full circle and see the process in the flesh. It was super powerful. 

Greg Lyons  22:23
Yeah, and I wish we could do this with all of our investors. Throw them in the back of the car, take a property tour, and drive around a particular MSA. That would be really cool because it was powerful. Unfortunately, we can’t do that, and the timing and schedules aren’t right, and that’s why people become passive investors and put their money into syndications. And just a quick note: we’re not telling people what to do, and we’re not giving advice. This has just been our experience with our dad and having this property visit. But that was powerful. It’s something that, hopefully, down the line, we get started doing investor field trips, say, Hey, we’re going to be in XYZ city at this time. Come and join us. We’ll drive around a little bit. So hopefully, that’s going to be a part of the seaside capital in the future. But for right now, I’m really happy we made the trip. If you’re invested in some of those Dallas properties, you’ll probably be getting an email from us. We’re just kind of an update on the individual property, some pictures of the property, and just our thoughts on what we saw. And overall, we’re just really happy with the entire Dallas portfolio.

Tim Lyons  23:39
Absolutely, Greg and I just want to stack on top. I would love to do some investor field trips, and if you guys are going to be in the New York area, or if you guys are going to be down in Virginia at all, reach out to us, right? I mean, this whole business is relationship-based. And there’s nothing better than sitting down to get a cup of coffee, or a lunch or a dinner, and just kind of being together, right? Because that’s what we’re all about here. And especially if it’s after this weekend and the conference, we went to Greg; it’s all about relationships, it’s all about being with the people that are supporting you and uplifting you and building that tribe and that team out. So, I highly encourage you guys to reach out to us if you’re going to be in our areas.

Greg Lyons  24:17
Yeah. And it’s not always to be an investor, right? We’re not going to be pounded down your door to invest in any of our deals. It’s more like, hey, what do you do? And how can we be a part of that journey? And I just had a cup of coffee with someone this morning. And I don’t think that guy’s ever going to invest in one of our deals, but I know he’s now looking for XYZ in the real estate world. While I may not be interested in that, I may be able to make a connection down the road that could be fruitful for him and fruitful for someone else, and it’s going to have no effect on me. It’s not going to put any money in my pocket. But when you make those connections, and you kind of have that abundance mentality, it’s all going to work out. I’m going to make connections. That’s when the rubber meets the road, and you really turbocharge your life. Alongside that, you can start turbocharging your bank account down the road.

Tim Lyons  25:06
Oh, I love that. Yeah. Well, Greg, thank you for spending some time with me today. It’s a pleasure. I miss you already. It was great to spend a couple of days with you. And our next podcast, I think, is going to be with Paul. And we’re gonna talk about the conference that we just went to and all the takeaways that we had from that. So, with that being said, Greg, good seeing you. I hope the listeners got some value out of this. And that’s gonna do it for this week’s edition of The Passive Income Brothers podcast, and we look forward to serving you again next week.